Long Run Trends in Income Inequality in the United States, Uk, Sweden, Germany and Canada: a Birth Cohort View

(1) The trend in many countries, since the mid 1970s, to increased inequality and polarization of the earned income of men [Jenkins 1995; Gottschalk and Smeeding, 1997]. Although the same has often not been true for women, one might expect such trends to produce greater inequality and poverty in family incomes after taxes and transfer—but is this true and how general is this tendency? (2) The fact that in a number of countries (for example, the United States and Canada), the rapid rise in average hourly real wages of the early 1970s has been followed by a quarter century of stagnation. However, trends in average income hide the differing experiences of particular birth cohorts, and of different segments of the income distribution. How general is the phenomenon of stagnation in living standards? (3) Rising differentials in earnings between young and old workers, and an absolute decline in the average real earnings of young workers, (especially those with little education[Beaudry and Green, 2000]) has been combined with persistently high youth unemployment in many countries. Concern with intergenerational inequalities has increased, but how much of aggregate inequality is due to intergenerational differences?